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Government Spending and Private Consumption

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  • Toshihiro Ihori

Abstract

This paper investigates the macroeconomic effects of anticipations about future fiscal expenditures within a simple perfect foresight general equilibrium model. This paper extends S. Djajic (1987) by investigating an anticipated permanent increase in government spending. An anticipated permanent increase may temporarily stimulate capital accumulation. The questions of whether anticipated or unanticipated changes in government spending have a larger effect on capital accumulation and output is related to the questions of whether government spending is initially above or below the optimal level.

Suggested Citation

  • Toshihiro Ihori, 1990. "Government Spending and Private Consumption," Canadian Journal of Economics, Canadian Economics Association, vol. 23(1), pages 60-69, February.
    • Handle: RePEc:cje:issued:v:23:y:1990:i:1:p:60-69
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    Cited by:

    1. Theodore Palivos & Chong K. Yip, 1996. "Government Purchases and Real Interest Rates with Endogenous Labour Supply," The Economic Record, The Economic Society of Australia, vol. 72(219), pages 332-340, December.
    2. Chang, Wen-ya, 1999. "Government spending, endogenous labor, and capital accumulation," Journal of Economic Dynamics and Control, Elsevier, vol. 23(8), pages 1225-1242, August.
    3. Shieh, Jhy-yuan & Chen, Jhy-hwa & Lai, Ching-chong, 2006. "Government spending, capital accumulation and the optimal policy rule: The role of public service capital," Economic Modelling, Elsevier, vol. 23(6), pages 875-889, December.

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